Pirelli sees room for growth in high-value products

Pirelli expects to increase its annual high-value production capacity to 53 million units by 2020.

MILAN—Pirelli & C. S.p.A. is targeting average annual growth in sales of at least 9 percent for the 2016-20 period, driven by its focus on high-value products.

The Italian tire maker said in its annual report, published in March, that it aimed to increase the proportion of high value products to 63 percent of revenue by 2020, up from 54 percent in 2016.

Pirelli said it intends to invest, on average, 7 percent of annual revenue for the 2017-20 period, 80-plus percent of which will be earmarked for the high-value segment.

The company expects to increase its annual high-value production capacity to 53 million units by 2020 from 38 million units in 2016. The increase will be achieved partially through the conversion of standard-tire lines to high-value capacity, according to the annual report

The company foresees a reduction of 7 million units in "standard" capacity, 3 million of which will be converted to high-value.

Pirelli said the project to covert capacity in Brazil began in 2017 to serve growing demand in the NAFTA region. Additionally, Pirelli will increase production capacity for high-value tires globally by 11 million units to achieve the target.

As part of its growth strategy, Pirelli aims to speed up its homologation program with prestige and premium car manufacturers. In 2017, the Milan-based company obtained 402 homologations, 324 of which it classified as 'new premium'.

Also, the company aims to develop "an unprecedented product innovation program," which it says will strengthen its specialties and super specialties range.

Between 2017 and 2020 Pirelli intends "to launch up to 18 new product lines with global and regional coverage, including winter products, summer and four seasons, specialties/super specialties plus traditional products."

Future prospects for Pirelli and other major tire manufacturers will be discussed and debated at Future Tire Conference 2018, taking place May 30-31, during the Tire Cologne international trade fair in Cologne, Germany.

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